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Multip person farm start up / tax ID question
Posted on 4/6/16 at 3:13 pm
Posted on 4/6/16 at 3:13 pm
So I have 4 family members going in together on a farm. cost will not be divided evenly and everyone will spend from their personal accounts.
How do we get go about doing this while each person still has the ability to write off farm expenses on taxes?
Can we just file the necessary paperwork with the state to start a business and get a tax ID number and each person listed on the business use the number to write off expenses when they do their taxes?
Also curious if a CPA or some type of an attorney would be best to speak with to get this set up
How do we get go about doing this while each person still has the ability to write off farm expenses on taxes?
Can we just file the necessary paperwork with the state to start a business and get a tax ID number and each person listed on the business use the number to write off expenses when they do their taxes?
Also curious if a CPA or some type of an attorney would be best to speak with to get this set up
2
Posted on 4/6/16 at 3:32 pm to FelicianaTigerfan
Normally this is accomplished via a partnership where each person puts in their resources and gets a percentage in the ownership, if money is needed then people put up according to their ownership percentage and income/losses are allocated out.
Another option is co-ownership, where everyone's individual names are on the title and everyone picks up their own income and expenses. There is no separate business entity to speak of.
I'd proceed carefully. Family members do weird things and feelings get hurt, so I'd want to be as formal and in writing and official as I could be.
Another option is co-ownership, where everyone's individual names are on the title and everyone picks up their own income and expenses. There is no separate business entity to speak of.
I'd proceed carefully. Family members do weird things and feelings get hurt, so I'd want to be as formal and in writing and official as I could be.
Posted on 4/6/16 at 3:35 pm to LSUFanHouston
quote:
I'd proceed carefully. Family members do weird things and feelings get hurt, so I'd want to be as formal and in writing and official as I could be.
Bingo, going through this as we speak.
Posted on 4/6/16 at 4:01 pm to LSUFanHouston
quote:
Another option is co-ownership, where everyone's individual names are on the title and everyone picks up their own income and expenses. There is no separate business entity to speak of.
This is what we are looking into doing. I have one member of the family that has more disposable income. Many expenses he will end up paying for. I want him to be able to write these off as expenses and any year end profits on livestock sales will go to reimbursing cost from the previous year to each person and extra income divided evenly / put into a joint account.
quote:
I'd proceed carefully. Family members do weird things and feelings get hurt, so I'd want to be as formal and in writing and official as I could be.
We have already hit this bump in the road a few times with different individual ideas on things. Im not really sure this will even work without being a huge fued and feeling getting hurt but nobody wants to walk away and let the other have it
Posted on 4/6/16 at 4:14 pm to FelicianaTigerfan
quote:
cost will not be divided evenly and everyone will spend from their personal accounts.
No chance that it will go off without a hitch. You have to treat it as a business, not a hobby, when it's not an individual venture.
Form a budget, set the minimum that each partner can contribute, then have in writing that whatever percentage an individual spends, that's the percentage of the net income they get. If there's a loss, then everyone should share in the loss equally.
Then y'all should probably get an operating loan and pay yourselves an hourly wage so if someone is stingy with money and labor, then they aren't getting more in return than what they're worth.
Posted on 4/6/16 at 7:20 pm to FelicianaTigerfan
quote:
I have one member of the family that has more disposable income. Many expenses he will end up paying for. I want him to be able to write these off as expenses and any year end profits on livestock sales will go to reimbursing cost from the previous year to each person and extra income divided evenly / put into a joint account.
You need to go see an attorney that is well versed in nonstandard LLC operating agreements. All of these are easily accomplished, but you have to have an attorney that actually knows how to write an agreement, as opposed to pulling one of a website and filling in the blanks.
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